Gambling gal: A woman leaves a casino aboard the Royal Caribbean Cruises Ltd.'s Voyager of the Seas, berthed at Tokyo's Ohi wharf on Sept. 14. Some believe casinos in Japan will become a possibility when the Diet resumes next month. | BLOOMBERG

Casinos bet on success in Tokyo

Most of the Olympics-related news reported since Tokyo won the right to host the 2020 Games is about projected economic benefits and drawbacks. A lot of construction will take place over the next seven years, but not all of it will be directly related to the sporting event.

Take casinos, which are suddenly a sure thing. Ever since Shintaro Ishihara proposed casinos for the Tokyo waterfront district of Odaiba back in 1999, when he first became governor, the prospect of legalized gaming has waxed and waned. Ishihara initially thought the area, developed for an international city expo that his predecessor canceled, was going to waste and that it was the perfect place for casinos. Over the years, however, his plan ran into obstacles, most of which were erected by the National Police Agency, which was wary of organized-crime involvement, as well as any changes to jealously guarded fūzoku (immorality) rules that made casino gambling illegal and thus guaranteed pachinko parlor profits, some of which legally go into NPA benefits schemes.

But over the years a burgeoning bipartisan group of national lawmakers has been putting together its own plan to create special zones where regulations that prohibit gambling would be relaxed, and now they are making their move. According to Tokyo Shimbun, a bill to make these extralegal zones a reality will be the first order of business during the next Diet session, and it seems almost certain that the bill will pass. Thereafter, the group will submit more detailed bills to make Integrated Resorts (IR) happen in Odaiba, as well as other cities in Japan. If construction starts by 2016, casinos could be open for business by the time the athletes arrive for the Olympics.

The global gaming industry is so confident of this development that it held a conference earlier this month in Tokyo. Heavy hitters like MGM Resorts International, Las Vegas Sands Corporation and Wynn Resorts outlined their respective visions for what kind of IR could be built in Tokyo. In a Reuters’ report on the conference, the capital was called “the last great untapped (casino) market due to its wealthy population and proximity to China.” Actually, local gamblers are almost never mentioned in Japanese media reports on the subject. The focus is always foreign tourists. The name of the bipartisan lawmakers group doesn’t include “casinos” or “gambling.” It is ostensibly a tourism industry promotion federation.

A prescient article about casinos that appeared in the June 8 issue of the weekly economic magazine Toyo Keizai opened with a scenario: A businessman from China or Southeast Asia arrives at Haneda Airport where he boards a speedboat that takes him directly to IR in Odaiba. During the day he attends an international conference and at night he gambles in the attached casino. Before leaving he sees the sights in Asakusa and spends lots of money. The article also mentions Fuji TV as a “major promoter” of IRs in Odaiba, where the broadcaster moved when the area was first being developed. Fuji Media Holdings is set to be the main Japanese player in any joint venture in the district, and its focus is again foreign tourism.

So will locals be encouraged or, for that matter, allowed to gamble? A feature by special correspondent Naoji Shibata in the Sept. 15 Asahi Shimbun describes a trip he took to a casino in Vietnam. The venue, which opened in July, is located in a coastal fishing village about three hours from Ho Chi Minh City and was virtually empty on the weekday he visited. That’s because Vietnam’s communist government considers gambling a social evil and prohibits its own citizens from entering the casino. But 200 km west of there, on the Cambodian side of the border, are a dozen smaller casinos filled with Vietnamese tourists, seven days a week.

Since Macau outstripped Las Vegas in terms of revenue in 2006, only four years after opening its first IR, Asia has become the dominant international platform for gambling, commanding 43 percent of global sales, but like Vietnam some countries limit access to their casinos. South Korea has a number of IRs, but only one allows South Korean citizens to enter. Singapore, which is starting to rival Macau for the title of most popular IR destination, charges its own people a hefty admission fee.

Accounting firm PriceWaterhouseCoopers says that Asian culture is particularly amenable to gambling, which is why these IRs have become so successful so quickly. One problem with this race to the top is that Asian casinos have yet to develop the kind of effective security measures that are standard in the West. Money laundering is much easier to carry out at Asian casinos.

In that regard, Tokyo may be even more attractive to the global gaming industry, since Japan is technologically savvy in terms of monetary security. It is the home of Nihon Kinsen Kikai, the company that manufactures 70 percent of the world’s cash-inspection devices. What it doesn’t have is a system for addressing gambling addictions, a social problem the U.S. gaming industry acknowledges by channeling part of its revenues into treatment programs.

While Japan is the only G8 country that doesn’t presently have casinos, it does have betting. In fact, legitimate gambling revenues in Japan amounted to ¥24 trillion in 2010. Annual revenues from casino gambling In the U.S. is only ¥5 trillion. Of course, ¥20 trillion of the Japanese take comes from pachinko, whose adherents are hardly the kind of high rollers these international casino operators have in mind when they talk about Tokyo’s “wealthy population,” but they do constitute a potential clientele that could have a huge economic impact if permitted to partake. Using an uncomfortably apt metaphor, a former government official told Asahi that “operating a casino in Tokyo would be like buying a lottery ticket that is already a winner.” And as in any game, if there’s a winner there’s got to be a loser.